The end of cheapo, fly-by-night health insurance and its impact on costs and coverage

Igor Volsky has a great post this morning at Think Progress[1] that sheds a lot of very helpful light on the issue of people getting notices about cancellations and price hikes for what were lousy but cheap health insurance policies:

“Many young and healthy beneficiaries who are currently receiving cancellation notices from individual insurers are understandably upset that they have to change policies. They like the individual plan they currently have but only because they rarely use the coverage they purchase at those attractively low premium rates. But past experience shows that the policy you think you like because you’re healthy today won’t be there when you become sick tomorrow. You may be paying a low monthly premium, but the out-of-pocket health care costs you incur after falling ill could send you into bankruptcy.

Under reform, you’ll find more comprehensive insurance in the exchanges, sometimes at lower cost than what you’re paying now. But even if the monthly premiums are higher, you’ll be paying for better care that will cover more services should you fall ill. You’ll also be contributing to a system in which everyone can always sign-up for health care coverage.”

Here’s another way to think about it: Imagine that if, rather than requiring all of the amazing safety protections, fuel mileage standards and pollution controls that the government has gradually mandated of car companies over the last several decades, the industry had been allowed to sell lousy, dangerous and polluting cars with no such standards. Now imagine further that all of the consumer protections had been enacted in one fell swoop in 2013.

That’s similar to what’s happening now with health care. In addition to dramatically expanding coverage, the Affordable Care Act is now requiring all kinds of minimal protections that should have been required for decades but that were held at bay by lax regulations, corrupt politicians of both parties and dog-eat-dog markets. The results, of course, of this lack of consumer protection was the disastrous system under which we’ve been operating until now in which people often received the health insurance equivalent of cars that lacked seat belts and air bags, belched smoke and got 12 miles per gallon.

The new requirements will take some getting used to for some, but as with seat belts and air bags, we’ll all be better off as a result of the improved protections.